Dow Chem tries to avoid paying Rs 100cr

Olga Trellis, The Asian Age, July 18, 2007
Mumbai, July 18: Dow Chemical chairman Andrew Liveris has in a letter to Indian ambassador to the United States Ronen Sen tried to enlist his support to get the Union ministry of chemicals and fertilisers to drop its demand for the payment of Rs 100 crores as a deposit for environmental remediation costs in Bhopal.
Dow Chemical, which now wholly owns Union Carbide, is currently embroiled in court proceedings, to which the Indian government is also a party, over a final settlement in Bhopal, where over 22,000 people were killed following a horrific gas leak at the Carbide plant in December 1984. The ministry of chemicals and fertilisers had applied to the court to order the company to pay Rs 100 crores as a deposit before anything else.
This is one of the obstacles that Dow Chemical wants removed before it re-enters India to do business, a move which the Indian government has been quietly encouraging.
In the letter to Mr Sen, Mr Liveris said: “The Government of India’s ministry of chemicals and fertilisers applied to the court in May 2005 to order Dow to pay a deposit of Rs 100 crores (approximately $22 million) against environmental remediation costs. The court has to date deferred the ruling on the merits of the application. It follows logically from the GoI’s statements regarding the non-liability of Dow that the MoCF should withdraw its application for a financial deposit against remediation costs. Certainly a withdrawal of the application would be a positive, tangible demonstration that the GoI means what it says about Dow’s lack of responsibility in the matter.” Mr Liveris begins his letter to Mr Sen by saying: “It was a pleasure to see you again at the US-India CEO Forum in New York on October 25. I specially appreciated your support in discussing a resolution of the Bhopal legacy issue as a tangible deliverable outcome of the CEO Forum. Given the statement made by the Government of India representatives in front of all meeting attendees that Dow is not responsible for Bhopal and will not be pursued by the Government of India, it will be important to follow through to ensure that concrete, sustained actions are taken that are consistent with these sentiments.”
Mr Stanford (sic – Sanford, ed.) Lewis, attorney on behalf of some shareholders of Dow Chemical, sent a copy of Mr Liveris’ letter to Mr Sen to the US Securities and Exchange Commission and drew the attention of the SEC to the tone and contents of the letter. Mr Lewis writes: “In what would appear to be a naked effort to circumvent the normal judicial process, Mr Liveris seeks the intervention of the ambassador to get the ministry to withdraw its application. Regrettably, this effort does not take place in a vacuum. We note the recent bribery disclosures by Dow Chemical and the $325,000 penalty paid by the company to the commission related to bribes to Indian officials to register its pesticides in India.”
Mr Lewis adds: “This letter betrays how difficult it will be for the company to resolve the Bhopal legacy in the manner now being attempted by Mr Liveris. As Mr Liveris acknowledges, the GoI and Dow are co-defendants in a public interest litigation. The GoI, he notes, has taken positions adverse to Dow.”
Mr Lewis asks the SEC to note that the “letter may be seen to be contradicting arguments presented by the company in its no-action request on the Bhopal resolution.” In a letter to the SEC on February 16, 2007, he said, Dow’s counsel had asserted that the company “was taking no new initiatives regarding Bhopal”, and submitted that there was inadequate evidence that the CEO has personally sought a response from the Indian government.” Mr Lewis encloses Mr Liveris’ letter to Mr Sen, saying that the letter demonstrates that the CEO and the company “are indeed actively involved in a form of negotiation and advocacy to address issues relative to remediation and liability — albeit to attempt to alter the course of current legal proceedings.” Mr Lewis said in his letter: “We are gravely concerned that the company has set upon a course of doggedly standing on a prior legal outcome and refusing to take further action that could truly put the Bhopal tragedy behind it, all to the company’s detriment. Whatever the merits or demerits of the company’s legal position, the legacy issue persists as an impediment to future investment by the company in the important and burgeoning Indian economy. We believe that a reassessment of the company’s best interests would dictate a different course and that consideration of new initiatives to address the specific health and environmental concerns of Bhopal’s survivors will be critical to Dow’s re-entry into this market. That is why we have proposed a resolution to require Dow’s management to report to stockholders by October 2007 on any new initiatives regarding Bhopal.”

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